Microsoft Corp. announced on Tuesday that its profit for the October-December quarter of 2023 soared 33%, powered by its significant investments in artificial intelligence (AI) and cloud-computing technologies¹². The company reported net income of $21.87 billion, or $2.93 per diluted share, beating Wall Street expectations of $2.79 per share¹. The Redmond, Washington-based software maker posted revenue of $62.02 billion in the quarter, up 18% from $52.75 billion the previous year, also beating expectations¹.
The company said that the increase in profit and revenue largely reflected growth in its cloud-computing unit, where Microsoft focuses most of its AI investments¹. Microsoft’s cloud business, which includes its Azure platform and Office 365 software, saw a 28% increase in revenue to $20.7 billion². The company also benefited from the strong demand for its personal computing products, such as Windows, Surface, Xbox, and Bing, which generated $18.6 billion in revenue, up 15% year-over-year².
One of the highlights of the quarter was the acquisition of video-game maker Activision Blizzard for $69 billion, which was formally completed on Oct. 13, 2023¹². The merger boosted Microsoft’s revenue growth by four points, according to James Ambrose, the company’s director of investor relations². The deal also added some of the most popular gaming franchises, such as Call of Duty, World of Warcraft, and Candy Crush, to Microsoft’s portfolio, strengthening its position in the booming gaming industry¹.
Microsoft CEO Satya Nadella said in a statement that the company’s strong performance was driven by its “innovation across the cloud and the edge that is delivering differentiated value to customers”¹. He also said that the company was “investing aggressively” in AI technologies, such as natural language processing, computer vision, and machine learning, to “empower every person and every organization on the planet to achieve more”¹.
Analysts and experts praised Microsoft’s results, saying that the company was firmly establishing itself as a frontrunner in the AI race¹³. Jeremy Goldman, director of briefings at Insider Intelligence, suggested that AI technology could help expand Microsoft’s share of digital advertising, which grew 12% this year to $14.93 billion³. He also noted that Microsoft’s AI investments could give it an edge over its rivals, such as Google and Amazon, in the cloud-computing market³.
Microsoft’s stock rose 3.2% in after-hours trading following the earnings release, reaching a new all-time high of $354.67 per share². The company also announced a quarterly dividend of $0.62 per share, payable on March 8, 2024². Microsoft’s outlook for the current quarter is optimistic, as it expects to generate revenue of $63.9 billion to $65.1 billion, with cloud-computing and gaming being the main growth drivers².
References:
¹: Microsoft profit soars 33 percent on AI, cloud gains; Google’s parent returns to double-digit growth
²: Microsoft soars 33% on AI, cloud tech
³: Microsoft Sales Soar Despite Irratating Upgrades To 365
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